Energy prices fell more dramatically in December while food prices increased at a faster rate.
Inflation in France cooled in December — a reading that comes after the European Central Bank’s decision to hold interest rates at the end of last year.
Consumer prices (CPI) rose by 0.8% year-on-year in December, following a reading of 0.9% in November, according to statistics body INSEE. The Harmonised Index of Consumer Prices or HICP, which allows for comparison between EU countries, came to 0.7%. That followed a reading of 0.8% in November.
“The fall in inflation should be attributed to a more pronounced decrease in energy prices, mainly those of petroleum products,” said INSEE.
Food prices, on the other hand, rose at a faster pace, while services and tobacco costs increased at a steady rate.
The prices of manufactured products fell in December, although they did so at a marginally slower pace.
The ECB left its key deposit rate unchanged at 2% in December against a backdrop of easing inflation and robust growth in the eurozone.
Among rate-setting committee members, there is, however, a lack of consensus over the trajectory of price pressures. Executive board member Isabel Schnabel warned in early December against stronger-than-expected services inflation and wage growth. She therefore added that she was “comfortable” with investors betting that the next move would be a hike.
France's François Villeroy de Galhau, another committee member, diverged from such rhetoric, warning that inflation may fall too far below the 2% target.
“The downside risks on the inflation outlook remain at least as significant as the upside risks, and we would not tolerate a lasting undershooting of our inflation target,” he said.
Eurozone inflation was recorded at 2.1% in November, and it has been hovering close to the ECB’s 2% target since early 2025.
Eurosystem staff projections show headline inflation averaging 1.9% in 2026, 1.8% in 2027, and 2.0% in 2028.
Fresh inflation figures for the eurozone are set to be published on Wednesday.
